Wall Street brokerage firms promised the retail investor exclusive access to the most sought after IPO in decades.

Now we know what IPO really means: “It’s Probably Overpriced.” This neat turn of phrase was coined by Chuck Jaffe last week in a piece on Marketwatch.

We also now know that the $16 billion, 400 million share offering was dumped on the “dumb money” little guys while the “smart money” institutional and hedge fund investors were told by the underwriters, Morgan Stanley, Goldman Sachs, etc. to “stay away” or “short” the stock.

This is a striking redo of the 2000 tech debacle. Remember, that’s when analysts told the big guys that the stock was “a piece of junk” from one corner of his mouth, while imploring the little guy to buy, buy, buy from the other!

As reporters Gina Chon, Jenny Strasburg and Anupreeta Das wrote in the Wall Street Journal last week, the practice of investment banks doling out IPO information selectively “is one of Wall Street’s best kept secrets: Securities firms are allowed to selectively confer with favored large investing clients about crucial information as they prepare IPOs.”

The Facebook debacle underscores what every investor needs to remember when investing his or her retirement account. Wall Street is about selling, and that’s it. Stock analysts should not be giving opinions about an IPO at the same time their firms are acting as underwriters. They should not be giving information that’s not in the prospectus to favored clients.

As the Journal’s Francesco Guerrera noted in his column today, the US market for IPOs has two fundamental flaws: “Analysts can discuss with investors their views of companies their banks are paid to bring to market, and they can choose which investors they can talk to.”

The insiders, meaning the investment banks and hedge funds, win, while the little guy loses. “What could have been a model example of the stock market’s strengths—an eight-year-old company with 900 million users raising billions of dollars from a cross-section of the investing public—ended up as a case study of the power wielded by insiders over outsiders,” Mr. Guerrera noted.

What’s more, the NASDAQ goofed again at the start of the IPO, which brought back memories of 2010’s “flash crash.” Like the “flash crash,” the disastrous Facebook IPO has once again spooked the small investor. Facebook investors have lost billions: the stock debuted at $38 per share on May 18. On Tuesday morning, it was trading at $30.16.

Meanwhile, the broad market is also in a tailspin. As of Friday afternoon, the Dow Jones Industrial Average was down 6.2% for the month of May. Most of the first quarter’s spectacular gains in stock have been erased.

I am told mattress sales are booming as investors seek a safe place to stash their cash.

Disclosure: Zamansky & Associates are securities attorneys representing investors in federal and state litigation and arbitration against financial institutions and other entities, including Morgan Stanley, Goldman Sachs and NASDAQ, including in connection with the Facebook IPO.